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Heathcare: The cold equations

Former governor Kitzhaber does the math and tries to rally people to deal with a heath care crisis

Dr. John Kitzhaber, an emergency room physician and former two-term governor of Oregon, visited Clackamas on Wednesday to tout the 'Archimedes Movement' - his campaign to use state healthcare reform as a springboard for a national debate.

'I'd like to impress upon you the urgency of this problem,' said Kitzhaber, addressing more than 200 business and political leaders gathered at the North Clackamas Chamber of Commerce. 'I think this is probably the largest domestic policy issue confronting our state and our nation. The cost of healthcare is about to become the single largest driver of our nation's $9 trillion deficit.

'A trillion is such a huge number, it can be difficult to put it into perspective, but I'll try: one million seconds ago was last week; one billion seconds ago, Nixon was leaving the White House; one trillion seconds ago, it was 30,000 BC.'

With the nation's ballooning deficits largely underwritten by foreign investors, like China, the governor pointed out that the United States might one day find itself unable to decide its own fiscal policies.

'The window in which we can act and shape our own future is narrow,' he said.

No school for you

To illustrate the failings of the nation's current healthcare system, Kitzhaber compared it to the K-12 system of public education.

All children, he pointed out, are entitled to a public education, which is financed by an explicit public subsidy. All taxpayers contribute to that subsidy, and all children receive the same benefit. Parents with more income can purchase additional services, like tutors, to enhance their children's education.

'When we run out of money in Salem, when fiscal constraints are tight, we talk about shorter school years or fewer electives - things like that,' he said. 'What we don't talk about is cutting access. We would never say, 'Next year, we're not going to teach grades 11 or 12,' or 'Every family earning more than $40,000 per year will have to postpone their children's entry into school until 2008.''

Kitzhaber described the nation's current healthcare delivery system as a historical accident, arising first from wage and price controls enacted during World War II. Employers, unable to compete for workers on the basis of salary, started offering non-wage benefits, like healthcare and pensions.

In 1954, under pressure from both organized labor and the business community, Congress made employer-sponsored medical coverage tax deductible. Medicare and Medicaid were passed in 1965 to provide healthcare for those who did not receive coverage from an employer - the poor and the retired.

Falling in between

A growing number of people in Oregon and across the United States are falling through a widening gap between the private and public health insurance systems, according to Kitzhaber.

'In the private sector, the assumption was that companies would have enough active workers to pay their own benefits, plus the benefits of retired workers, and that the company would have the financial strength to support this system for many decades to come,' he said.

As an example, he cited the General Motors Corporation, which in 1962 had 464,000 workers supporting 40,000 retirees. In 2005, the balance has shifted - now, 141,000 workers support 453,000 retirees.

'$1,200 to $1,500 of the cost of each new car made in America goes to pay for healthcare,' said Kitzhaber. 'That is a burden not shared by auto companies in Japan, or Germany, or even across the boarder in Canada.

'The world has changed in the intervening 40 years, but these programs haven't.'

With the 'baby boom' generation approaching retirement, publicly financed programs are being similarly squeezed.

'As a result, more and more people are falling into this gap between the two programs,' the governor said. 'Today, there are 610,000 Oregonians, and 50 million Americans, without health insurance.

'The inability to pay a medical bill is the second-leading cause of bankruptcy in Oregon and the United States, second only to the loss of a job.'

Towards the precipice

People who fall into this gap are turning to hospital emergency rooms for treatment, which they are required to provide by federal law. Those costs are then shifted back to individuals with health insurance and government healthcare programs.

'That cost shifting amounts to 10 percent of the nation's total expenditure on healthcare,' Kitzhaber said. 'Can you imagine if we went down to Salem and proposed a 10 percent tax increase? You'd go down there and tear the roof off.

'The only way this system saves us money is if we're willing to let people die on the ambulance ramp. We'll do a wallet biopsy and if you're Blue Cross negative, we let you die.'

As an alternative, Kitzhaber suggested a rational system of universal access, akin to the public education system in the United States. As one example, he cited the German model, which provides a basic level of coverage to all citizens, and allows them to purchase additional coverage on an individual basis.

'It should be a benefit for all of us, not just for some of us,' he said. 'Most of the uninsured today are working, and most of them are contributing to a healthcare subsidy from which they themselves do not benefit.

'We are much closer to the precipice than we think.'